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Cold facts warm dairy prices

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Columnist Lee Mielke wraps up the week’s dairy industry news.

U.S. dairy prices strengthened some last week, despite a fair amount of product coming to Chicago and a bearish August Milk Production report.

CME block cheddar closed Friday morning at $1.6125 per pound, as traders awaited the afternoon’s August Cold Storage data, up a quarter-cent on the week and 5 1/4-cents above a year ago.

The barrels finished at $1.60, up 15 cents on the week and 9 cents above a year ago. Twenty-seven cars of block and a whopping 59 of barrel were sold last week at the CME.

The Cold Storage report fed the bulls and Monday’s trading took the blocks up 5 3/4-cents and they gained 2 more cents Tuesday, hitting $1.69, the highest price since Aug. 24.

The barrels jumped 7 1/4-cents Monday and inched three-quarter cent higher Tuesday, to $1.68, highest barrel price since Aug. 22.

Milk supplies to the cheese vat continue to tighten, according to Dairy Market News. Discounted spot milk is no longer available and spot prices ranged from flat market to $1.50 over Class. Cheese sales vary by type, with provolone and mozzarella makers continuing to report steady to increasing orders.

Some curd producers also report continued heavy sales. Cheddar and traditional cheesemakers have eased back production while some will increase output in the next few weeks to build inventories for the holidays but CME price fluctuations are aiding current market instability, says DMN.

Cheese production in the West is steady. Some processors report slightly lower milk intakes due to some plants being closed for maintenance. Sales into the domestic market were unchanged from the previous week but competition with Europe continues to be “intense.”

Cheese stocks are still plentiful and outweigh recent demand. Contacts report that barrels are currently available, but the market will tighten in the coming weeks due to process cheese being exported.

Cash butter inched up to $2.4725 per pound Wednesday but closed Friday at $2.4475, unchanged on the week but it ended seven weeks of losses, and was 42 cents above a year ago.

The Cold Storage report was pretty neutral to the butter which gave up 3 cents Monday but regained three-quarter-cents Tuesday, climbing back to $2.4250.

Grocers are beginning to build butter inventories ahead of the fall rush, says DMN, so Central region butter makers are remaining busy. Butter production is active and cream availability is aiding the push. School pipelines have begun to increase bottling activity, thus butter producers are receiving more cream offers.

Western processors also report adequate supplies of cream and butter production is regular and more than sufficient to meet current demand. Industry-wide stocks are still comfortable to long. However, domestic buyers are lining up again to buy butter and worldwide demand and prices for butter are strong.

Western United Dairymen’s Friday newsletter states: “The September butter price average out of Germany and the Netherlands reached just over $3.70 per pound, nearly 20 cents higher than last month.”

Cash Grade A nonfat dry milk also finished last week unchanged, at 82 1/4-cents per pound, 11 1/4-cents below a year ago.

The powder gained three-quarters Monday and held there Tuesday, at 83 cents per pound.

HighGround Dairy brokers say, “Demand is lower for skim milk powder within the EU as buyers are likely waiting until the end of the month to secure product that will likely become even cheaper after the Public Intervention scheme officially ends.

However, in July, export volumes remained strong with shipments to Mexico recording the most growth by volume from the prior year.”

Good drawdown

Americans helped empty some of the nation’s butter and cheese supply in August but cheese stocks remain above those a year ago.

The USDA’s latest Cold Storage report pegged Aug. 31 butter stocks at 280.18 million pounds, down 27.1 million pounds or 8.8 percent from July and 38.5 million pounds or 12.1 percent below August 2016.

American type cheese, at 800.5 million pounds, was down 31.1 million pounds or 3.7 percent from July but 58 million or 7.8 percent above a year ago. The “other” cheese category showed stocks of 505.7 million pounds, down 5.3 million pounds or 1 percent from July but 33.1 million or 7 percent above a year ago.

The total cheese inventory stood at 1.33 billion pounds, down 36.4 million pounds or 2.7 percent from July but 92 million or 7.4 percent above a year ago.

Cows retiring

USDA’s Livestock Slaughter report shows August culling was up sharply from July and August 2016. An estimated 265,600 head were slaughtered under federal inspection, up 39,800 head from July and 21,000 head above a year ago. Culling in the first eight months of 2017 totaled 1.99 million head, up 79,500, or 4.2 percent, from a year ago.

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